Interview with Ralph Masiello

In this interview, Ralph Masiello discusses the role microgrids play in helping businesses and utilities improve energy security while reducing energy costs and emissions. He provides very recent examples of technology advancements that are helping spur microgrid deployments, highlights customer sectors that have compelling microgrid strategies, and raises some of the issues power engineers and utility experts must consider as they evaluate the impacts of microgrids on their systems.

Question: Microgrids are gaining interest among large utility customers. What are the main business and energy issues that are driving this increased interest?

There is increasing motivation among commercial, governmental and non-governmental organizations to install microgrids.

Of course, microgrids have been around for decades. They have been used, by some universities and other organizations to generate onsite power and to provide backup power during grid outages. But today, given the increasing frequency of widespread outages, more organizations are considering installing backup power generation. As they consider backup power, organizations are recognizing that it is also feasible to use onsite generation, based on renewable resources, to meet their routine energy needs and they can sell their excess power back to the grid as well.

So the real need for local energy security, the desire for sustainability, and the economics of connecting a facility’s generated power back to the grid have all become very realistic and favorable to energy customers, especially given the high prices of electricity in some markets.

Many New York, Connecticut, and New Jersey organizations are now considering installing microgrids. Their interest has grown out of their needs to provide energy continuity and security, which proved very vulnerable to flooding and grid outages during Hurricane Sandy. The U.S. Department of Defense is pushing aggressively to deploy microgrids as part of its overall energy independence and energy security strategy. Its efforts are helping spur development of microgrid technologies and business models.

What are the main technology advancements that are helping facilitate the use of microgrids?

First, renewable generation technologies, such as photovoltaics and micro-wind turbines, are technically proven and economically viable today. This was not the case 30 years ago. Also, combined heat and power is more efficient, cleaner, and more reliable and gas prices are low.

Second, thermal energy storage now provides a commercially viable and reliable distributed storage option to support microgrids that rely on intermittent renewable resources, such as wind and solar. Electricity storage directly in batteries is also becoming cost-effective. As everyone knows, high-performance batteries are already on the market for electric vehicles. And battery technologies for large, grid-scale storage deployments are now commercially viable for utility use. Sodium sulfur batteries, for example, have gained wide use in Japan for substation applications and are undergoing pilot tests by some U.S. utilities.

Automated demand response is another technology that is helping support the adoption of microgrids. Automated thermostat setbacks, lighting controls and controls that cycle end-use loads during peak periods are already offered in parts of the country. In wholesale deregulated markets, ADR is becoming a valuable market participant. For facilities that are operating islanded microgrids, ADR will play an essential role in helping manage loads to make most efficient use of the microgrid’s power generation and storage.

What issues do power engineers and other utility experts need to focus on as they evaluate the impacts of microgrids on their systems?

The integration of distributed generation into a utility system is not a trivial matter. For example, interconnection standards are evolving and engineers must consider the impacts of these new standards when implementing distributed generation systems. Also, if microgrid penetration is significant, utility operations will be impacted. A substantial penetration of photovoltaic systems on a distribution feeder, for example, can cause voltage fluctuations during changing solar conditions. This is already an issue in California. It is also an issue in Germany, and the country is modifying its interconnection standards accordingly.

Electricity market operators must consider the impact of microgrid demand response programs. Demand response is a valuable resource in the market but it means that a significant load is responding to prices in its own way. Market operators must evaluate these contributions and impacts.

Microgrids create new issues for facility engineers and planners. They must evaluate how the costs of microgrid technologies are changing over time and how exposed the facility might become to changing fuel and grid energy costs. If the facility is committed to an energy security strategy, it must consider how much storage will be needed onsite and its dependence on fuel supplies and deliveries. It must also anticipate changes in the power industry and environmental policies.

In the United States, commercial ships and port facilities are looking very seriously at microgrids. What is their motivation for this and how important is it?

Commercial ships and port facilities are introducing some very exciting use cases for microgrids. Recent Environmental Protection Agency mandates are prohibiting ships from using bunker fuel to run onboard diesel engines to power ship-board systems while the ships are in port. Switching to cleaner #2 diesel is expensive. And the ports themselves are coming under EPA edicts to stop using diesel engines to run their own systems and equipment.

So both ship owners and ports are coming under pressure to use cleaner energy and become more sustainable. As a result, ships are beginning to use land-based electric power while in port to run their air conditioning, refrigeration and other systems. And ports are converting to electricity to supply their own energy needs and also support ships with electric power. The ports are finding that microgrids can meet these substantial electricity demands, ensure the security of the port’s energy supplies during major storms and outages, and support their sustainability objectives.

Shipping operators are interested in shipboard microgrid systems to electrify ship services and motor-driven systems, provide a more resilient electric supply for refrigeration and guest needs, and also deliver excess electric power back to the port.

So ports and shipping companies have very complementary microgrid strategies that promise to produce very important economic, energy security and environmental benefits.

How can other commercial customers learn from this example?

Once an organization decides to invest in onsite generation, possibly storage and certainly demand management technologies, it is a no-brainer to take the next step and consider the economics of interacting with the grid. By interconnecting with the grid, a facility can get the lowest energy costs and create new revenue streams. And it’s important to note that customers can often decide to do this without regulatory involvement or approval. If a company has a complex of office buildings and wants to invest in a microgrid, it can get started immediately. This removes a potential barrier to development.

The roles utilities play in these implementations vary depending on the customer’s use of utility assets, how the microgrid interacts with the electricity distribution system, utility regulations, and the customer’s potential need to use utility rights-of-way. Utilities will have to evaluate these opportunities on a case-by-case basis. But some very forward-looking and aggressive utilities are working hard to develop these concepts. The Borrego Springs microgrid project operated by San Diego Gas & Electric, for example, is demonstrating the feasibility and value of microgrids to the local community and how utilities can make this work.

How are microgrids being pursued in developing countries?

Microgrids will play a very important role to help bring electricity to remote villages in developing countries. It is already cost-effective to install photovoltaics in a village and build small microgrids with battery storage to power nighttime uses, such as lighting, for residents.

Various companies are deploying systems around the world. In some countries, microgrids might run on photovoltaics, but in other countries microgrids might use liquid propane to run micro turbines. The approaches are creative and based on local needs, geography and other conditions.

The benefits are substantial and meaningful. The lighting provided by electricity helps educate the populace. It enables citizens to recharge their cell phones so they can take advantage of mobile commerce. Liquid propane is a cleaner cooking resource than wood-fired or charcoal-fired stoves that cause asthma, lung cancer and other illnesses and so it can help alleviate these conditions. So from education, economic and public health perspectives, microgrids make a lot of sense in developing countries.

What kind of research is underway or needed to further advance adoption of microgrids?

The industry is very interested in microgrid economics. Demonstration projects conducted by our company and others, and studies of commercial microgrids in operation around the world, are showing that these systems can be managed to offer economic benefits and that by operating a microgrid, facility owners can make money in energy markets.

The next step is that a facility in a given geography and energy market must be able to determine the best configuration of energy resources to invest in for its microgrid.

We’re working on economic modeling tools that can help facilities identify the best ways to approach their microgrids. We’re also investigating how a facility can integrate its private microgrid investments with its utility’s infrastructure hardening and resiliency investments for mutual benefit. For example, if a city or a state government facility wants a microgrid and the utility wants to harden its distribution infrastructure, the two strategies can complement one another. When a regional outage occurs, the microgrid can then serve as backup generation for critical loads in the immediate area to keep hospitals and schools open. Suddenly, the microgrid becomes a resource for the public. This notion is interesting and might change the way utilities upgrade their distribution infrastructure. And it provides a community with resiliency against widespread outages.

Ralph Masiello has focused his work in recent years on the application of Smart Grid and electricity storage technologies to system operations and the integration of distributed resources into markets and operations. In the industry, he works as Innovation Director and Senior Vice President at DNV KEMA. He serves on the U.S. Department of Energy’s Electricity Advisory Committee and chairs its Storage Technologies Subcommittee. He is a member of the National Academy of Engineering.